Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO:

Standing Committee on City Services and Budgets

FROM:

General Manager of Corporate Services

SUBJECT:

Vancouver Economic Development Commission 2003 Business Plan and Budget

 

RECOMMENDATION

CITY MANAGER'S COMMENTS

POLICY

PURPOSE

The purpose of this report is to seek approval for the Vancouver Economic Development Commission 2003 Business Plan and Budget (Appendix A), and to enter into a contract with the VEDC for the provision of economic development services.

BACKGROUND

The Vancouver Economic Development Commission is an arm's length, non-profit organization created by Council in 1997 as a focus for economic development in the City. The Commission seeks to unite the private and public sectors in the active and progressive management of Vancouver's economic growth.

The Commission Board consists of fifteen volunteer members drawn from the Vancouver business community. Collectively, the Commissioners bring an array of knowledge and contacts in such areas as transportation, international finance, technology, economics, communications and urban development. Commissioners are appointed by Council, and in general, serve two-year terms. In addition, two members of Council serve as ex-officio members.

The five staff members of the VEDC provide economic development services to the City, which are funded through a fee for service contract. In 2001, a review of economic development business models resulted in Council re-affirming VEDC as the City of Vancouver's vehicle for economic development, and establishing which activities were determined as critical in order to move Council's objective of economic development forward. Renewal of the services provided by the Commission are subject to annual review by Council. Annually, Council also reviews the results of the Commission's activitiesincluding reporting of the Commission's accomplishments, and operating and financial results for the past year. Quarterly reports and a nine-month summary of activities up to the end of September 2002 is contained in the supplementary information binder and on file with the City Clerks Department. The complete 2002 Annual Report including audited financial statements will be reported to Council in April 2003.

DISCUSSION

2002 Year to Date Review
Council has identified economic development as a priority for the City of Vancouver. The most critical components in providing proactive and effective economic development is the availability of adequate resources, strong leadership and expertise. The year 2002 was one of transition for the VEDC. With a new Executive Director and staff, the VEDC increased awareness of the Commission through the formation and promotion of a new brand, "vibrant-innovative-connected", and vision statement, "To be the preferred global centre for innovation and knowledge-based enterprise". The re-branding efforts included the launch of a new VEDC website and public relations communications promoting the new brand and vision.

The Commission also increased its level of economic development activities, with a concentration on their core activities and some special projects. Amongst the special projects that were carried out under the VEDC's supervision were:
· The Downtown Eastside Lease Subsidy and Tenant Improvement projects in conjunction with Partners for Economic and Community Help (PEACH).
· A capacity study to provide recommendations regarding the opportunities that should be pursued and actions that should be taken to promote development in the DTES.
· A cluster study to identify industry sectors that have developed in the city because Vancouver provides specific comparative advantages.

The VEDC 2002 Business Plan set out three principal goals, and specific objectives for each goal. Briefly, key accomplishments relating to each goal, up to September 30, 2002 are:

Goal 1 - To provide leadership with respect to economic development in Vancouver, the VEDC:
· Drafted a 2020 vision, mission and goals document for economic development in Vancouver. This strategic document will serve to guide the VEDC in developing their business plans and in prioritizing economic development activities.
· Maintained relationships with several organizations, such as the Vancouver Board of Trade and BC Business Council to align their respective economic development strategies.
· Supported initiatives such as the:

· Reviewed and reported on the business models of 38 economic development organizations, in cooperation with City's Corporate Services department.
· Launched a new brand (vibrant-innovative-connected) and redesigned its website to incorporate the brand and facilitate easy navigation and access to data.
· Continued to monitor and report on factors impacting the economic development climate in Vancouver such as: the number of requests received, the number of hits to the website, the number of media articles on economic development in Vancouver and labour force and employment statistics.
· Conducted workshops with Council, City staff, the business community, the VEDC Board and Advisory Board. Topics included the formulation and launch of the brand and the results of the cluster analysis which identified Vancouver's key competitive private sector clusters.
· Provided input to the City's submission to the House of Commons Standing Committee on Finance regarding economic development issues in Vancouver; to Council regarding the DTES; and to the City's planning staff regarding their draft commercial growth strategy.

Goal 2 - To promote Vancouver as a vibrant and diversified destination for business and investment, the VEDC:
· Worked to retain and expand business through the BusinessFirst! program launched in May 2002 by interviewing businesses and CEOs to understand economic development concerns in Vancouver's business environment. More than 90 interviews have been completed. VEDC will prepare a report to Council outlining the key strengths and concerns related to doing business in Vancouver.
· Worked to attract new business through the use of the cluster study to focus on industry sectors and provide specific comparative information relative to other municipalities for conducting business in Vancouver. VEDC's report on Vancouver as a Biotechnology Centre positions Vancouver as a major competitor to attract biotechnology business.
· Are developing a small business resource website to support ongoing small business growth.
· Developed a database of over 2,600 business contacts.
· Attended the CORENET and the Bio2002 conferences.
· Updated their Competitive Advantages study.
· Published Vancouver 'sell sheets' to promote Vancouver's brand and competitive advantages and distributed them to over 30 consular members and 20 foreign trade offices around the world.

Goal 3 - To assess and report on performance indicators for Vancouver the VEDC:
· Prepared Quarterly reports of key metrics of economic development performance in the City and benchmarks for VEDC performance.
· Maintained comparative data and monitored best practices on key jurisdictions.

The VEDC also provided secretariat duties to support the Commissioners and members of Council through monthly meetings, financial reporting, workshops, and quarterly reports.

2002 Financial Results
The 2002 Annual Report will include a full review and reporting of the 2002 financial performance and will be submitted to Council in April 2003. As of September 30, 2002 the VEDC had an operating surplus of $28,174 (and have used $22,925 for loan repayment), due primarily to the delay in hiring one Business Development Officer and anticipates an operating surplus at year end of $45,000 (from which total loan payments of $30,000 will be made) due to over achieving on obtaining other funding.

In 2002, the VEDC built up a contingency reserve of $30,000 for their lease obligations. As of September 30, 2002 VEDC has received $12,939 in corporate sponsorship cash and $9,885 in revenues from other levels of government. In addition, the VEDC has received over 1,500 hours of volunteer time and $30,000 of value from in-kind contributions as at September 30, 2002.

VEDC Core Activities Income Statement
Year to Date to September 30, 2002
And Projected Year End 2002

       

Total Year    Actual      Projected

  Projected Year

       

Budget      Year to date  Year End    End Variance

Revenues

                  

Service contract (City)

550,000

412,500

550,000

0

Other revenues

  

20,000

22,824

48,000*

  

28,000

TOTAL REVENUES

570,000

435,324

598,000

28,000

 

Expenses

            

Core Operating

  

550,000

407,150

553,000

  

(3,000)

OPERATING SURPLUS

20,000

28,174

45,000

  

25,000

Loan repayment

  

20,000

22,925

30,000

  

(10,000)**

Net

      

0

5,249

15,000

15,000
 

Notes:

* The expected additional revenues between September 30, 2002 and year end are attributed to PEMDI matching grants, contributions from Telus and PEACH management fees.

** VEDC made a lump sum payment of $10,000 towards the loan in February 2002.

2003 Business Plan
The VEDC have identified the following vision, mission, values, and goals for 2003, which are intended to support Council's objectives of economic development:

2020 Vision
To be the preferred global centre for innovation and knowledge-based enterprise.

Our Mission
To provide leadership, continuing strategic direction and actions that enhance the strength and diversity of Vancouver's economy.

Values
· Innovation
· Diversity
· Entrepreneurship
· Associations
· Sustainability

Goals
1. To foster a supportive and competitive business climate in Vancouver.
2. To retain and expand business currently operating in Vancouver.
3. To attract new investment and knowledge-based business to Vancouver.
4. To benchmark progress in Vancouver and best practices globally.

VEDC will also provide secretariat support to the Commissioners and members of Council, support the transition of the Partners for Economic and Community Help (PEACH) to a fully functioning separate legal entity, and elevate its profile within the business community.

The VEDC has identified objectives to pursue towards the achievement of each of these goals:

1. To foster a supportive and competitive business climate in Vancouver.
· Promote the 2020 vision and Vancouver brand.
· Identify key policies, initiatives and issues that affect the business climate in Vancouver.
· Provide strategic advice to Council and City staff to ensure strategies, infrastructure and a pro-business attitude that supports growth of key industry clusters.
· Influence regional, provincial and federal government policies and initiatives that impact economic development in Vancouver.

2. To retain and expand business currently operating in Vancouver.
· Implement the BusinessFirst! program designed to identify local issues that affect the competitiveness of Vancouver firms and facilitate business growth.
· Report results with recommendations from the BusinessFirst! program to Council and City staff.
· Provide resources to small business and showcase success stories.

3. To attract new investment and knowledge-based business to Vancouver.
· Provide relevant information on Vancouver.
· Target clusters for growth including: technology (i.e. life science/biotechnology, alternative energy sources), film/tv, tourism and education.
· Increase international awareness of Vancouver's advantages as a place to do business.

4. To benchmark progress in Vancouver and best practices globally.
· Provide quarterly reports on key economic indicators for Vancouver.
· Monitor business development and movement.
· Benchmark best practices and the economic development climate in key cities.
· Report quarterly and annually on VEDC's performance.

Complete details of the activities and expected outcomes as they relate to these goals can be seen in Appendix A.

Performance Measurement and Targets
As indicated in the 2003 Business Plan, performance measurement is a key goal of the organization. Based on the goals, activities and outcomes in the Business Plan, VEDC will be setting quarterly targets for performance, and will report back on their progress to Council. Examples of measures include: number of information requests received, number of hits to the web site, number of businesses attracted to the City, and number of media articles on the organization. The 2002 Third Quarter Report to Council (included in the supplementary information binder and on file with the City Clerks Department) highlights a number of economic indicators, including: labour force, employment, business licenses, business incorporations, housing starts, permit values, and bankruptcies.

2003 Budget
The VEDC has identified their financial requirement of $570,000 to carry out these core activities (see Appendix A). A significant portion of these funds will be utilized for staff. A summary of the core expenses included in this budget are:

Salaries and Benefits                                     405,000     392,000        13,000
Professional Fees (Audit, Legal, Insurance)      7,000         8,000        (1,000)
Bank Charges                                                        300            200             100
Conferences/Meetings                                      15,000         8,000          7,000
Dues and Subscriptions                                       2,000        2,000                 0
Hospitality and Entertainment                             4,000         3,300            700
Maintenance/ Parking                                         2,700          3,000          (300)
Office Supplies and Equipment                        16,000        16,000                0
Office Telecommunications                                7,500                0          7,500
Printing and Publications                                    8,000        15,000        (7,000)
Promotion and Communications                        35,000        35,000               0
Rent - gross                                                       50,000        50,000               0
Research/Data Purchase                                     2,500           5,000        (2,500)
Travel                                                                15,000        12,500         2,500
TOTAL EXPENSES                                         570,000     550,000       20,000

The VEDC also commits to generating corporate sponsorship and additional revenues in 2003 which will be used to meet their 2003 loan obligation.

FINANCIAL IMPLICATIONS

The financial resources required to carry out the core activities in this business plan are $570,000. The VEDC requests Council provide this level of funding for core economic development activities as contemplated in the 2003 Business Plan. This would be an increase of $20,000 or 3.6% from the VEDC's 2002 core operating contract of $550,000. The increase is primarily due to inflation plus a modest increase to the salary of one of the Business Development Officers to reflect market and an increase to conferences and meetings to better enable the VEDC to meet their economic development goals.

Staff recommends that Council approve this level of funding, as it will continue to ensure proactive economic development on behalf of Vancouver; source of funds to be the 2003 Operating Budget.

CONCLUSIONS

The VEDC has submitted its 2003 Business Plan and Budget and has requested that Council renew the annual operating contract and provide the funding necessary to fund core activities. Staff recommends the renewal of the contract and approval of funding in the amount of $570,000 for 2003.

* * * * *

Link to Appendix A

csb021024.htm

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